Yahoo Finance Bearish: Analysts Just Cut Their Cooper Energy Limited (ASX:COE) Revenue and EPS estimates
Market forces rained on the parade of Cooper Energy Limited (ASX:COE) shareholders today, when the analysts downgraded their forecasts for this year. Both revenue and earnings per share (EPS) estimates were cut sharply as analysts factored in the latest outlook for the business, concluding that they were too optimistic previously.
After the downgrade, the nine analysts covering Cooper Energy are now predicting revenues of AU$134m in 2021. If met, this would reflect a sizeable 71% improvement in sales compared to the last 12 months. Losses are predicted to fall substantially, shrinking 92% to AU$0.0043. Before this latest update, the analysts had been forecasting revenues of AU$151m and earnings per share (EPS) of AU$0.0018 in 2021. There looks to have been a major change in sentiment regarding Cooper Energy's prospects, with a substantial drop in revenues and the analysts now forecasting a loss instead of a profit.
See our latest analysis for Cooper Energy
The consensus price target fell 6.5% to AU$0.43, implicitly signalling that lower earnings per share are a leading indicator for Cooper Energy's valuation. Fixating on a single price target can be unwise though, since the consensus target is effectively the average of analyst price targets. As a result, some investors like to look at the range of estimates to see if there are any diverging opinions on the company's valuation. There are some variant perceptions on Cooper Energy, with the most bullish analyst valuing it at AU$0.50 and the most bearish at AU$0.30 per share. This shows there is still some diversity in estimates, but analysts don't appear to be totally split on the stock as though it might be a success or failure situation.
Of course, another way to look at these forecasts is to place them into context against the industry itself. It's clear from the latest estimates that Cooper Energy's rate of growth is expected to accelerate meaningfully, with the forecast 71% revenue growth noticeably faster than its historical growth of 27% p.a. over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to grow their revenue at 5.9% per year. Factoring in the forecast acceleration in revenue, it's pretty clear that Cooper Energy is expected to grow much faster than its industry.
The Bottom Line
The most important thing to take away is that analysts are expecting Cooper Energy to become unprofitable this year. While analysts did downgrade their revenue estimates, these forecasts still imply revenues will perform better than the wider market. After such a stark change in sentiment from analysts, we'd understand if readers now felt a bit wary of Cooper Energy.
With that said, the long-term trajectory of the company's earnings is a lot more important than next year. At Simply Wall St, we have a full range of analyst estimates for Cooper Energy going out to 2023, and you can see them free on our platform here.
Of course, seeing company management invest large sums of money in a stock can be just as useful as knowing whether analysts are downgrading their estimates. So you may also wish to search this free list of stocks that insiders are buying.
This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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